U.S. Tobacco Cooperative files bankruptcy amid class-action litigation

By Sarah Lizee

Olympia, Wash., July 8 – U.S. Tobacco Cooperative Inc. filed Chapter 11 bankruptcy on Wednesday in the U.S. Bankruptcy Court for the Eastern District of Northern Carolina.

“This filing provides us the best way possible to meet our short-term obligations and plan for the future,” Oscar J. House, chief executive officer and president of the cooperative, said in a press release.

House said the action is in response to the uncertainty presented by the ongoing class-action litigation brought against the cooperative in 2005.

As a result of the filing, the cooperative intends to satisfy obligations to its over 550 member-growers and over 200 of employees, and suppliers and customers will continue to receive service and products.

“This filing will allow USTC to reorganize and restructure to honor commitments to stakeholders and ensure the organization’s sustainable future,” the cooperative said.

The cooperative is a borrower under a syndicated credit facility dated Nov. 15, 2016 with Truist Bank as administrative agent and lender alongside AgCarolina Farm Credit, ACA; CoBank, ACB; Fifth Third Bank, NA; and Pinnacle Bank. Under the facility, the cooperative had access to an up to $105 million tranche A revolver and a $35 million tranche B revolver.

U.S. Tobacco has filed a number of first-day motions in the court and is seeking court approval to access the cash collateral of its pre-petition lenders and Truist Bank.

The cooperative listed $100 million to $500 million in both assets and liabilities.

No creditors were listed with unsecured claims of $1 million or more.

Raleigh, N.C.-based U.S. Tobacco is the largest tobacco cooperative in the United States. It filed bankruptcy under Chapter 11 case number 21-01511.

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